Houston’s Outlook for 2017: Is the Worst Behind Us?

Houston’s Outlook for 2017: Is the Worst Behind Us?

As we celebrate the New Year, 2017 has delivered much better news about oil markets and Houston’s economy. Oil markets appear to be moving toward rebalancing, with oil prices currently holding in the $50-$55 range. Further improvement in the price of oil is the key to Houston’s near-term future, and nothing is assured yet. We saw similar gains fall apart over the summer of 2015, and have not yet reached the $65 per barrel that would assure a healthy and moderately-growing North American fracking industry.

The mix of factors that drive Houston’s economy right now are quickly changing. Momentum from rapid growth in the fracking boom has largely dissipated after two years of no job growth; the eastside petrochemical boom is ending; and upstream drilling jobs are not yet returning. The U.S. economy remains the one stalwart, helping out, just as it has throughout the downturn. We must hope that drilling continues to make substantial progress in the coming year, bringing back some of the 70,000 oil-related jobs lost in the last 24 months. It will take a very quick and strong turnaround in drilling activity to bring significant payroll job growth to Houston in 2017.